May a Court Impute Income when Calculating Alimony If the Party is Already Employed Full Time?

The calculation of alimony payments upon divorce can be a tricky undertaking. In New Jersey, a family court judge will look at the financial lives of both spouses, and then apply an appropriate set of factors to determine an appropriate payment amount. Of course, the judge must have access to the most accurate information in order for the calculated amount to be fair and reasonable. What happens if one of the parties under reports his or her income? What if one of the parties quits his or her job, or takes a lower paying job for the purposes of avoiding the payment of alimony? Unfortunately those situations happen in some divorce cases. State law and case law provide us with guidance on how New Jersey family court judges should handle these cases.

Elrom v. Elrom

In the case of Elrom v. Elrom, the court decided a case that involved a spouse’s underreporting of income. In that case, the Defendant reported his income from work as a software engineer and technical writer as $120,000 per year, and the Plaintiff reported $80,640 in previous income per year for her work as an attorney. The parties each alleged that the other party either did earn, or could have earned more than the reported income.

The Plaintiff’s reported income of $80,640 was the salary she made at a New Jersey law firm working as an associate. Prior to having children, the Plaintiff had made substantially more, $175,000 per year, working at a New York City law firm. After having children, the Plaintiff left work for a time to take care of her children, and then worked part-time (approximately 26 hours per week) for $67.50 per hour. Then, she took on a full-time job at the New Jersey law firm making $80,640 per year. She was unemployed at the time of the trial.

The Defendant’s stated income of $120,000 per year represented a portion of his actual earnings. The trial court found that based on his LLC’s bank statements and his own personal bank statements over a period of three years, the defendant had earned significantly more, imputing his income as $230,731 per year.

Imputed Income Where Party is Employed Full Time

The Elrom case deals with the “imputation of income,” which allows a court to treat a party as if they earn more income than they have reported that they earn. Courts may impute income for the purposes of determining a child support payment calculation if a party is, without good reason, unemployed or underemployed.

Here, the Court cited case law showing that those child support guidelines apply to alimony. Further, the court held that it could impute income to a party that is employed full-time, quoting Arribi v. Arribi, the court stated “[o]ne cannot find himself in, and choose to remain in, a position where he has diminished or no earning capacity and expect to be relieved of or to be able to ignore the obligations of support to one’s family.”

In the Elrom case, the court found that the Defendant misrepresented his income because he only included partial earnings, excluding income from consulting services and royalties. The trial judge found that the Defendant’s credibility was lacking due to those omissions. Further, the court found that the Defendant was underemployed, as a large portion of his employment had recently been terminated. It found that the imputed income of $230,731 was proper.

The Plaintiff, on the other hand, was unemployed at the time of the trial. Her testimony and the evidence showed that she was the primary caregiver of the couple’s two young children, one of whom had special needs, which limited the Plaintiff’s employment opportunities. The court therefore agreed that imputing her last full-time salary of $80,640 was proper, as her current situation would not allow for her to make her former, higher salary.

If you are divorcing and are concerned with the process of calculating alimony payments, please call Peter Van Aulen a New Jersey divorce lawyer for a free comprehensive in office consultation.

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